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Sunday, January 25, 2004

Why Ergonomics Injuries are Underreported...

Worker Awarded $12 Million for Workers Comp Insurer Fraud

"We don't need OSHA enforcement because employers already have a financial incentive to make their workplaces safe -- workers compensation." This is one of the more popular myths spread by many in the employer community to justify their opposition to any new OSHA standards or stronger enforcement.

The myth was repeated over and over again during the hearings in 2000 over OSHA's proposed ergonomics standard, even though worker after worker described the difficulty in getting compensated for work-related musculoskeletal disorders (MSDs). Generally the problem was that the employer and the workers comp company denied that the back injury or carpal tunnel syndrome was work-related. Far more likely that it was caused by workers playing tennis all night after a hard day of work at the meatpacking plant or nursing home. In addition, many states have passed laws making it nearly impossible for workers to receive compensation for MSDs.

Thus, it was no surprise when a South Dakota workers comp insurer denied a woman's carpal tunnel syndrome claim.

Now, normally workers compensation is an "exclusive remedy" for job-related injuries and illnesses, meaning you can't sue your employer if you are injured on the job.

Unless, as Workers Comp Insider points out, there is "bad faith on the part of the insurer. A successful bad faith suit might be triggered by an insurer's nonpayment of claims, mass denial of claims, or the like. " In other words, workers comp fraud by the insurer:

This week, a woman in South Dakota just secured a $12 million award for a bad faith claims practice, most of it in punitive damages. The claim involved the denial of about $8,000 in medical bills for a carpal tunnel injury. The original grounds for denial centered around compensability and whether the injury arose out of and in the course of employment.

Her insurer said the denial occurred because "there was a lack of proof that her hand problems were caused by her work" and further suggested that "her hand problems were likely the result of a 1998 home injury, not her work in the kitchen of the nursing home."

A determination of work-relatedness and compensability are huge issues in many repetitive stress injuries, and if this claim dispute had ended there, the claim might have stayed within the realm of the state workers comp authority to uphold or deny. But in this case, the insurer's claims handling practice was the smoking gun that gave rise to a charge of bad faith, opening the door to a suit.

" ... the case centered around a Travelers Insurance incentive program that offered bonuses to claims workers who lowered payouts on claims. Called the Claim Professional Incentive Program, it offered workers end-of-year bonuses of as much as 20 percent of their pay if they reduced overall payouts from one year to the next.

It's no wonder that OSHA has determined that musculoskeletal injuries un underestimated by half."

The lesson here for insurers, according to Workers Comp Insider, is

that managing a workers compensation claim is not simply the exercise of processing paper in the most cost efficient way possible, but the response to a human event. In our experience, keeping the focus on the person rather than the dollars generally results in the most favorable outcome by whatever measures you use for success